Railway Minister Piyush Goyal has created a sense of urgency, says Tilak Raj Seth, Executive Vice President and Head, Mobility at Siemens. In an interview with FE Online’s Smriti Jain on the sidelines of IREE 2017, Seth talks about the need to speed up electrification pace and how India can surpass China. According to Seth, when it comes to manufacturing locomotives and train sets, Make in India is the only economically viable option. Edited excerpts:
What has your experience been with the new Railway Minister Piyush Goyal? What is it that you think he can bring to Indian Railways?
He has been in the Railways for just about four weeks. But, he has created a sense of urgency in a very positive manner, on many topics…like the pace of electrification, improving operations to a global level, enhancing throughput, augmenting safety, etc. He has also said that for safety, there is no budget constraint because it takes priority over everything. All the General Managers of respective Railways are free to do whatever is needed for safety. He has empowered the team completely.
Of course he mentioned that, the governance required from the board, also needs to be specified in a designated time. This sense of urgency which he has created, on these critical topics, is very positive and very welcome. There is lot of sincerity and sense of purpose behind the whole thing, which is very good.
What are the 5 things that the Railway Minister should put on his priority list, which are doable as well, without being ambitious about the targets?
Railways is not a business which can be set up and forgotten about. It’s a continuous, on-going dynamic business, moving 7 billion people annually, which is like the whole planet moving in India, at least once on the rail. What’s important is that the right track is caught. Like somebody explained – what’s the way to God – turn right and go straight. If Railways came on the right track of things – and that’s possible within the time that the current government has – the Minister has mentioned in his speech, we are a team in hurry, but he said it in very positive manner.
In my opinion, the following things can be done; Railways have started going behind infrastructure projects of locomotives and various manufacturing additions, they must continue with that. There is also the Kanchrapara project for EMUs. The Minister has mentioned that train sets will be made. So capacity addition must continue.
Secondly, for us to have an enviable safe and secured system that we can all be proud of, is some time away. A lot can already been done right now. There are TPWS initiatives, they can be hastened. Everything that requires to be invested on signaling, safety and security, can be accelerated, and this is possible within this period. In electrification, we have roughly 30 to 40 thousand kms, yet in balance. This can’t happen naturally in one and a half years, but a significant part of this can be done. Today we have electrified about 4 thousand kms, and the Ministry is saying let’s do about 12 thousand kms, now that is possible.
From an industry perspective what is you are ask from the Railway minister?
Our ask is to continue to invest, modernize and upgrade. India has one of the oldest Railway networks in the world. But we did not match up to the technology edge, like the rest of the world. Some of the countries who started far later than us, they over arched the speed and journey, which we can get too. Look at China, they electrified roughly 55 thousand kms from past 10 years, and in the last 3 years, about 8 thousand kms per annum. Our pace is 4 thousand kms per annum. Once we reach about 12 thousand kms, then our pace would be better than China.
In half a decade’s time, we would have electrified our key routes and tracks. We should modernize the rolling stock, there should be safe and secure signalling systems, improve the operational efficiency. The world is of digitalization, so what we missed on the hardware technology, I think we can do it better than the world, in India, on the digitalization platform. There is a great talent in the country, and by using the data and the information that we have, using predictive maintenance, reducing cost and improving operational efficiency, I think a lot can be done.
The Rail Development Authority may soon get to decide fares. Does Indian Railways need dynamic fares?
Railways must have both facets of national role. One is they are the national carrier and they have to care inclusively for the poorest in the country to provide modern and efficient transportation. They also have a role of a business organisation that they continuously don’t end up losing money. Hence, when you consider these two goals, we have the question that should the fares be static or dynamic? If people can afford, why shouldn’t they afford? Mumbai carries 7.5 million passengers per annum and it being commercial capital. Why should the Mumbai traveller not be able to pay what is the commercial cost of travel? Eventually the economy pays for it. For example, if an employee has to travel by train and its fare goes up, the employer will pay for it.
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Similarly, the whole issue of fare revision cannot be to the exclusion of freight. Freight is 70% of the total revenue that railways gets and if railways were to shift part of the freight load of the road back to rail, then they need to be commercially attractive. So whether the fare revision is upwards or downwards, it has to be market savvy.
Should Indian Railways be investing in diesel locomotives?
The environment- friendly technology is certainly electrical. Naturally railways have commitment concerns in international domains. But, the electrical technology makes sense. Anything that can be done to enhance the use of electrical technology must be done.
There was buzz around the GE locomotive project. Are foreign investors jittery about the investment environment in India. Do you feel that way?
No. I think Railways is a very responsible international buyer. They will do nothing which is not in the interest of international investor. I don’t think they are walking out of any commitments. They only want to enhance the environment friendly manufacturing.
What would make Siemens invest billions in the Indian Railways?
One of the large projects being pursued by the Indian railways is to set up EMU manufacture, in a location near Kolkata called the Kanchrapara. We are one of the qualified companies and it is a large multibillion Euro project.
Will these EMUs be made entirely in India or will a certain percentage be sourced from abroad?
No, they will be made in India. Economic forces or market forces need an economy. One cannot compete unless you are economical and you cannot be economical unless you are producing locally. The 5000 coaches need to be made in India. The project requires complete value chain sources in the country. Starting all the way from design, engineering, project management, vendor development, local manufacture, installation, purchasing & sales, pre- post sales etc. These require 13 years of service. On a life cycle basis the cost has to be the lowest and it is only possible if the entire value chain is done in the country.